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Nearly 80% of Americans are living paycheck to paycheck without a financial plan to get themselves out of the rat race. Just as a nurse writes up a care plan to improve a patient’s health, everyone should have a written plan to improve their financial well being. It’s no secret that the educational systems have failed to prepare us for long term financial success. It seems that we are taught about everything except the concepts of money. A lack of education has resulted in many millennials facing debt crisis because of student loans, credit cards, and poor choices.
A traditional education conditions you to work for money, but financial education explores how money can work for you! We must work smarter, not harder. Then pass your money smarts on to your children so they can continue the cycle of wealth building in your family. I discovered that financial education is much cheaper than a college education, and is more useful in terms of financial success. Think about WHY this initiative will be worth your efforts. For me, it’s important to accumulate wealth in order to take care of my family, experience a high quality of life, and give back on a large scale.
The time is Now
Now is time to break the cycle! Millennials are already breaking free from old traditions and becoming more educated and empowered. Entrepreneurship and business ownership is becoming more attractive. Millennials are at an advantage, living hands-on through the beginning of a technological era; we have access to an abundance of information right at our fingertips thanks to the internet. It’s amazing what kind of journeys start with Google! Podcasts and books on finance are other great sources for self help. We must help ourselves if we want to build generational wealth. Nobody is going to save us. I highly recommend these 5 life changing books for anyone who is money motivated:
Even though all of the books have the same underlying principles, each book offers a fresh perspective. Think and Grow Rich focuses on money mindset/consciousness while The Total Money Makeover sums up wealth building in 7 steps. Rich Dad Poor Dad analyzes the different values, beliefs, and habits of both a rich man and a poor man. All of these books have been very impactful along my journey..
The cycle of poverty
According to the U.S. Census, an estimated 13.4 percent of Americans lived below the poverty line in 2017. Being broke and living in poverty isn’t the same. Depending on race, gender, and social status, some Americans are more likely to live in poverty. Women have a higher poverty rate than men, with unique hardships in the workplace being a leading cause. African Americans are twice as likely to experience poverty than whites because a history of oppression, institutional racism, and social inequality has created very real economic challenges for black people to escape it. Poverty on a global scale is a blog topic of it’s own.
It’s clear to see that there are levels to the complexities of poverty, and some groups have to work harder to get out of the rat race. A mixture of historical, social, structural, and personal factors create barriers to financial success. Please don’t be defeated by this though! And please don’t wait around for the government to fix your money problems, whether they caused them or not. No barrier is strong enough to hold back a person who has a burning desire to prosper in life.
Dr. Martin Luther King’s dream was so vivid that it became a reality. Before her death in 1919, Madame C.J. Walker’s hair care system made her America’s first black female millionaire. Frederick Douglass faced many obstacles at the start of life: he was born a slave, and was forbidden to read or write. Despite being at the mercy of his oppressors, he taught himself how to read and experienced freedom in his mind before he became free from slavery. Once he got free, he dedicated his life to the abolition of slavery. These black powerhouses sought prosperity, and even the collective power of their oppressors couldn’t stop them. God gave you the power to win, and your connection to this power can be found in your mind. If you can master your mind, you can master your life!
So what sets apart the rich from the poor? What are the habits of self-made millionaires? How is financial freedom possible for you and me? Despite structural pressures, political influences, and popular belief, God has already given you access to abundance. You are worthy of an abundant life. Opportunities to create the life of your dreams are everywhere. Once you accept this as truth, you’re mentality shifts. You start to view wealth building as a fun game instead of a pointless race. It is so hard to reprogram your mind, because society and the media have already deeply conditioned and shaped it for you. Because of this, it’s also hard to entice Americans to sacrifice instant gratification for long term financial gains. Successful people don’t necessarily have higher IQs or more degrees, but they do have the desire and discipline to reach their financial goals. This is not about getting rich quick, but living everyday with a definite purpose. Wealth building happens over time if you DO the following:
Pay Yourself First
One of the first habits to create on a wealth building journey is pay yourself first. You truly owe it to yourself. Paying yourself is just as important as paying any other bill. If you are going to trade time for dollars, invest in your future too. If you can set aside 10% of your income every time you get paid, and leave it untouched, you will start to develop self discipline. The results will positively motivate you to continue to build and you might even notice an increased peace of mind.
Develop a Money Mindset
Some people subconsciously fear money and believe it is the root of all evil. It’s true that some evil people have acquired a lot of money to do who knows what with it, which makes it even more vital for good people like you and me to acquire wealth for the higher good. I believe that money itself is good because it improves my quality of life so I welcome more of it. I am already rich because of my mind and spirit, which are two things no one can take away from me.
Money is energy and we can attract more of it with positive thoughts or repel it with our fears. The fear of failure, poverty, and criticism are mental blocks that keep us trapped in the cycle. We have already acknowledged how a corrupt system has created poverty for several generations. It’s easier to place blame, but taking full ownership of your financial situation develops a rich mindset. We must focus on what we have control over: Ourselves.
Developing a money mindset requires the abandonment of a lack mindset. Instead of saying things like “I need” or “I can’t afford”, replace them with affirmations or questions like “I will get” or “how will I afford?”. We put so many limitations on ourselves through thoughts alone. The hardest part about developing a money conscious is getting past your own mind. No matter your socio-economic status or situation in life, financial success is an option.
Create a Financial Game Plan
Working with a financial coach or adviser can really give you direction while on your journey. They can hold you accountable and offer sound advice. Financial goals become plans once they are written down. A financial plan might factor income protection, retirement savings, investments, debt resolution, financial goals, and so on.
Create a Monthly Budget
Budgeting is an easy step towards financial clarity. Creating a budget and tracking expenses is a great way to manage money. It is helpful to break expenses down into categories, such as housing, utilities, transportation, food, etc. Somehow putting the numbers on paper allows you to see where the holes are in your money. Budgeting also forces you to face the flaws in your spending habits. When you know how much money is coming in/going out and where from/to, you gain control of your finances. What you focus on, you create more of. So when you pay attention to your money, and start giving your finances more energy, you automatically create better money habits. Be sure to subscribe to The Presley Post to receive your FREE budgeting template!
Unless we get a president who truly wipes away student loan debt, a lot of us are stuck with it. So we need to deal with it or end up deeper in the hole because of interest rates. Automobiles keep people in a debt cycle because they trade their car in every few years and never pay their loan off; if you get an auto loan you pay out more than the car is worth.
If you can position yourself to pay more than the minimum payments on your debts, you pay them off quickly and might save tens of thousands of dollars in the long run. Don’t tell yourself you can’t afford paying more than the minimum because we all have unnecessary expenses we could cut back on to put our money to better use. How much money could you free up to invest every month if your car, credit cards, medical bills, home, and student loans were paid off? Debt free living and investments lead to financial freedom.
Build an Emergency Fund
Only 40% of Americans are able to cover an unexpected expense of $1000. It is recommended that you have 3-6 months worth of expenses in an emergency fund. Once you reach this personal level of financial security, you become less afraid of your boss. You are more likely to take a leap of faith and chase your dreams doing what you love. That’s what life is about! With an emergency fund in place you won’t have to go into more debt if the tire or engine blows. You would have the ability to pay cash for the emergency, but be sure to save & rebuild your funds as soon as you can.
Decrease Expenses and Increase Cash Flow
In order to get out of the rat race you have to find ways to decrease expenses and increase cash flow. Which subscriptions can you live without? Can you make coffee at home instead of buying Starbucks everyday? Can you take a lunch to work instead of eating out everyday? These daily savings add up. You can increase cash flow with side jobs and solid investments. Get creative!
Have Multiple Streams of Income
The average millionaire has 7 streams of income! Rental income is a stream of income from rental properties. Royalties is income from products you sell or license. Dividends is a stream of income from owning stocks. Capital gains generate income when assets increase in value. Profit income is from buying and selling. Interest income comes from lending money. Earned income comes from working a job. Many people rely on a 9-5 as their only source of income in an economy that doesn’t guarantee job security. Diversify your income streams to get out of the rat race.
Surround Yourself with Wise People
On your journey to financial freedom it is necessary to surround yourself with people who are smarter and more successful than you. They will inspire you to grow and share their knowledge with you. It’s such an advantage to have a mentor, accountant, financial advisor, and other experts on your team.
Learn How to Invest Money
There are different ways to invest your money and it’s important to take time to learn what you are investing in. Retirement savings is one way to invest money. Many employers offer 401k but there also individual retirement accounts such as traditional or Roth IRAs. Real estate investing is another vehicle on the road to financial freedom. Stocks, bonds, and mutual funds are other ways to invest. Compounding interest is what makes investing so powerful and magical. Your money grows without having to add any more to it!
Buy Assets, Avoid Liabilities
Liabilities create an expense while assets generate income. Many people see their home as an asset but technically it is a liability until paid off. Debt free real estate is an asset; it allows you to generate monthly rental income. Other personal assets may include checking & saving accounts, art, jewelry, etc. Liabilities are essentially debts or money owed.
So are you up for the task? Wealth building is 80% behavior and 20% head knowledge. So act now; you don’t have to know all the details as to how you will do it, just start where you are! Apply these principles and create successful habits for yourself. Wealthy people read everyday, meditate, and make their health a priority. They take calculated risks and learn from their mistakes. They do not fear failure. This is how you get out of the rat race. I wish you much success on your road to riches! Let’s elevate.